Volvo Buses India witnesses demand for high-end buses in urban transportation growing rapidly with more cities in the country upgrading bus services. However, the company believes that growth in long distance travel will remain flat.
?The city bus market will see probably 30% growth year on year for modern buses, but the inter-city long distance, we feel, will remain at an average growth of about 5%,? said Akash Passey, managing director, Volvo Buses India.
?The demand is very good from big cities. The smaller cities have taken in smaller volumes, and I think that for about 10-12 months they are going to experience this,? said Passey. ?Now they are in discussions for more smaller quantities. So, India will see phenomenal growth in modern city buses in the next 3-5 years.?
The company, which sold 535 buses in the calender year 2009, expects sales to grow 10-15% this year.
The Swedish bus maker has been among the early entrants into the air-conditioned, low-floor city bus segment beginning with Bangalore in 2006, but now faces an increase in the number of competitors.
In addition to local rivals such as Ashok Leyland and Tata Motors, automobile maker Mercedes-Benz last week announced its plans to enter the Indian city bus segment to tap what it estimates is a market for at least 500 buses per year and which would grow 20% annually.
?Earlier we were the only one waving a flag for high quality vehicles,? said Passey. ?Now we see others, including local manufacturers, doing the same. Why we are happy is bacause we are not the only one promoting it, so the market size expands quite rapidly for our kind of vehicles.?
The growth in demand for low-floor buses in urban transportation has been driven by the central government’s fiscal stimulus package in January 2009 which provides assistance to cities for purchase of buses under the Jawaharlal Nehru National Urban Renewal Mission. The scheme, meant for cities with a population of over a million, recommends that 20% of buses procured should be low-floor ones.
Now present in 11 cities compared to two last year, Volvo counts states such as Karnataka, Andhra Pradesh, Kerala and Rajasthan among its larger customers.
?India’s bus market is evolving and maturing. Passengers are seeking greater comfort from public transportation,? said Kapil Arora, Partner, auto practice, Ernst & Young. ?Several cities and states are likely to streamline and expand their mass public transportation networks in the next few years.?
He added that in the bus market, the government has an important role to play as a catalyst as a large segment is controlled by state transport undertakings and also because of policy decisions such as excise duties and spending on road development.